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Spain's gas market prices 'significantly cheaper' than rest of Europe for first time
27/07/2022
SPAIN'S gas market prices are now 'significantly cheaper' than elsewhere in Europe for the first time in history, partly driven by the country's far lesser reliance on Russian supply, according to the National Markets and Competition Commission (CNMC).
Taking the Dutch TTF as a reference, the Spanish Organised Iberian Gas Market (MIBGAS) has typically featured higher prices, but these have been falling since October 2021.
Last year, the average MIBGAS cost for D+1 was €1.19 per megawatt per hour (MWh) higher than the Rotterdam-based Title Transfer Facility (TTF) terminal.
This, which channels natural gas from a pocket in the North Sea and retails it wholesale across Europe, had been able to offer extremely low prices due to soaring demand in the aftermath of the Covid-19 pandemic, as the TTF's national markets were seeing a rapidly-recovering economy, the CNMC explains.
Things began to change in October, creating tension in global markets – including increasing unsettlement in relations between Russia and Ukraine, falling levels in European underground gas deposits, the entry of Russian gas being limited to amounts featured in long-term supply contracts, and delays in authorisation and launching of the NordStream 2 pipeline.
In Spain, gas prices hit historic highs during the winter of 2021-2022 – at their peak, on December 21, reaching €183 per MWh – due to uncertainty over the Russian supply and aggressive competition internationally from GNL.
Prices in MIBGAS averaged €47 per MWh over 2021 as a whole, skewed by the post-October figures and putting them nearly €37 per MWh higher than the average for the year 2020, when they were calculated at €10.25 per MWh.
This price of €10.25 in 2020 was the lowest annual average in history, but households and industry felt the pressure when the following year brought an increase of over 300%.
Spain stopped importing gas from Algeria – via a pipeline interchange in Tarifa (Cádiz province) – on November 1 last year, and expanded the capacity of its Medgaz pipeline by 25%, the benefit of which works started to be felt in the early months of 2022.
Now, just over halfway into the year, Spain's strategy has led to its per-MWh gas prices falling below those of the TTF for the first time since MIBGAS began operating the national gas market seven years ago.
During the last full calendar year, MIBGAS' 68,793 gigawatts per hour (GWh) generated covered 18% of Spain's national gas requirements – compared with the 11% it produced and traded in 2020.
Business volume went up by just under 73% year on year in 2021, consistent with MIBGAS' upward growth trend that had been interrupted sharply with the onset of Covid.
Europe-wide, though, TTF has seen the greatest growth since the end of 2020, widening its leadership over other gas markets on the continent, whilst the UK's NBP (National Balance Point) shrank for the sixth consecutive year as a consequence of the Brexit referendum and the country's subsequent departure from the European Union, according to the CNMC.
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SPAIN'S gas market prices are now 'significantly cheaper' than elsewhere in Europe for the first time in history, partly driven by the country's far lesser reliance on Russian supply, according to the National Markets and Competition Commission (CNMC).
Taking the Dutch TTF as a reference, the Spanish Organised Iberian Gas Market (MIBGAS) has typically featured higher prices, but these have been falling since October 2021.
Last year, the average MIBGAS cost for D+1 was €1.19 per megawatt per hour (MWh) higher than the Rotterdam-based Title Transfer Facility (TTF) terminal.
This, which channels natural gas from a pocket in the North Sea and retails it wholesale across Europe, had been able to offer extremely low prices due to soaring demand in the aftermath of the Covid-19 pandemic, as the TTF's national markets were seeing a rapidly-recovering economy, the CNMC explains.
Things began to change in October, creating tension in global markets – including increasing unsettlement in relations between Russia and Ukraine, falling levels in European underground gas deposits, the entry of Russian gas being limited to amounts featured in long-term supply contracts, and delays in authorisation and launching of the NordStream 2 pipeline.
In Spain, gas prices hit historic highs during the winter of 2021-2022 – at their peak, on December 21, reaching €183 per MWh – due to uncertainty over the Russian supply and aggressive competition internationally from GNL.
Prices in MIBGAS averaged €47 per MWh over 2021 as a whole, skewed by the post-October figures and putting them nearly €37 per MWh higher than the average for the year 2020, when they were calculated at €10.25 per MWh.
This price of €10.25 in 2020 was the lowest annual average in history, but households and industry felt the pressure when the following year brought an increase of over 300%.
Spain stopped importing gas from Algeria – via a pipeline interchange in Tarifa (Cádiz province) – on November 1 last year, and expanded the capacity of its Medgaz pipeline by 25%, the benefit of which works started to be felt in the early months of 2022.
Now, just over halfway into the year, Spain's strategy has led to its per-MWh gas prices falling below those of the TTF for the first time since MIBGAS began operating the national gas market seven years ago.
During the last full calendar year, MIBGAS' 68,793 gigawatts per hour (GWh) generated covered 18% of Spain's national gas requirements – compared with the 11% it produced and traded in 2020.
Business volume went up by just under 73% year on year in 2021, consistent with MIBGAS' upward growth trend that had been interrupted sharply with the onset of Covid.
Europe-wide, though, TTF has seen the greatest growth since the end of 2020, widening its leadership over other gas markets on the continent, whilst the UK's NBP (National Balance Point) shrank for the sixth consecutive year as a consequence of the Brexit referendum and the country's subsequent departure from the European Union, according to the CNMC.
Related Topics
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